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Morning Dew 19 May 2020

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THE GOVERNMENT OF INDONESIA REVISED COAL AND MINERAL MINING LAW

The performance of the Indonesian coal and mineral industry is highly dependent on the coal consumption of the Steam Power Plant (PLTU) and demand from China. For the first time the Chinese National Bureau of Statistics (NBS) reported China's economic growth grew negative by 6.8% in 1Q20, and it is expected to increase in 3Q20. The industrial, retail & asset investment sectors in China remained under pressure. The Chinese government temporarily closed coal imports until April 2020 due to the spread of the coronavirus. Production of the mining industry has been severely disrupted due to covid-19.

 

Global Coal prices and demand have declined since 2019. Indonesian Government confirmed support for the coal mining sector by revising the Coal and Mineral Mining Law No.4/ 2009 amid weakening commodity prices and the risk of a second wave of COVID-19 attacks due to easing lockdown policies in several developed countries. Going forwards, the revision of the Coal Law is estimated to give positive effects for industry players and state revenues. The new Coal Law is related to legal certainty for coal mining permits, stock divestment, mining investment, value added, and coal utilization as a national energy source. It will also guarantee a change in the contract extension of the Coal Mining Business (PKP2B) to a Special Mining Business License (IUPK) without an auction in the same area. The total area of PKP2B company's mining holes in Indonesia reaches more than 87,000 Ha.

 

The stock prices of several coal and mineral issuers such as PT Adaro Energy Tbk (ADRO), PT Bukit Asam Tbk (PTBA), PT Indo Tambangraya Megah Tbk (ITMG), PT Timah Tbk (TINS), PT Aneka Tambang Tbk (ANTM) and PT Vale Indonesia Tbk (INCO) reached at different levels after the Coal Law was officially approved by the government on last Tuesday. Some of these issuers experienced weakening and strengthening. Other companies that are also estimated to benefit positively from the new Coal Law are PT AKR Corporindo Tbk. (AKRA) and PT United Tractors Tbk (UNTR) because these two issuers’ businesses are very closely related to the coal sector. The new Coal and Mineral Mining Law will also guarantee the next operations of six giant coal mining companies with a mining contract (PKP2B) period between 2020 and 2025.

 

JCI

On Monday trading session (5/18), JCI barely increased by +3.5 points (+0.08%) to 4,511. Total trading volume reached 6.1 billion shares with Rp6.5 trillion transaction value. Foreign investors, again, posted a net sell amounting to Rp669 billion, compounding the year-to-date foreign net sell to Rp25.6 trillion.

 

Only three sectors advanced, i.e. miscellaneous industry (+3.90%), infrastructure (+2.44%), and mining (+2.42%). On the other hand, the retreating sectors were led by basic industry (-1.99%), finance (-0.71%), and manufacturing (-0.26%). Stocks supporting the JCI were TLKM (+3.9%), ASII (+5.4%), and ADRO (+10.3%). On the contrary, stocks weighing the JCI down were BBRI (-3.1%), BRPT (-4.5%), and UNVR (-1.2%).

 

U.S. NEWS  

U.S. stocks jumped to extend its gains as drugmaker Moderna Inc announced positive results from a phase-one clinical trial for its experimental COVID-19 vaccine and combined with optimism over the reopening of the U.S. economy after U.S. states lifted coronavirus lockdowns. Moderna’s propelling the vaccine into the next phase of clinical testing after the phase-one vaccine trial produced positive antibody responses in all 45 human volunteers tested. The DJIA rose 3.85% to 24,597.37, the S&P 500 gained 3.15% to 2,953.91 and the Nasdaq Composite added 2.44% to 9,234.83.

 

U.S. Treasury prices down, edging yields higher as stock rally on COVID-19 vaccine hopes and coupled with a soothing statement from Jerome Powell that the central bank still had tools to fight the recession. The benchmark 10-year notes were 27/32 lower to yield 0.73%. The two-year notes fell 2/32 to yield 0.18%. The 30- year bonds were down 2-25/32 to yield 1.44%.

 

Crude oil prices continue to jump, Brent futures jumped by 8.34% to US$35.21/barrel, while WTI crude jumped by 10.23% to US$32.44/barrel.

 

COMPANY UPDATE

GIAA TEMPORARY LAID OFF 800 EMPLOYEES CONTRACTS

PT Garuda Indonesia (Persero) Tbk (GIAA) will carry out efficiency to minimize operating costs and prevent losses as a result of the COVID-19 pandemic, among others by laying off some 800 employees temporarily with contract labor status or a Specific Time Work Agreement (PKWT) ) for three months from the date of May 14, 2020 ago.

 

BSDE IN 1Q2020 RECORDED MARKETING SALES Rp7.2 T

PT Bumi Serpong Damai Tbk. (BSDE) in 1Q2020 recorded marketing sales realization of Rp1.79 trillion or already reached 25% of the FY2020 target of Rp7.2 trillion. That achievement was supported by the new products launching, namely four residential products and two commercial products, and land sales. In detail, the realization of marketing sales comes from:

  • Rp1.06 trillion came from the residential segment, coming from the sale of Mozia, Savia, Greenwich, Vanya Park, Fleekhauz, Nava Park, The Zora clusters in BSD City, and Grand Wisata Bekasi.
  • Rp525 billion from sales of commercial land, which was largely derived from land sales in BSD City
  • Rp76 billion came from sales from the South Gate apartment project in South Jakarta, The Elements in South Jakarta, Akasa, and Upper West in BSD City.
  • Rp133 billion came from ICE Business Park and North Point – Nava Park sales in BSD City.

 

AKRA WILL REFINANCING BOND Rp895 B

PT AKR Corporindo Tbk. (AKRA) will refinance the AKR Corporindo Phase I Year 2017 I Sustainable Bonds which will mature in July 2020 with a value of Rp895 billion with a coupon of 8.5% per year. To repay the bonds, the company will use a loan facility from a local bank.

 

A.P. PETTARANI TOLL ROAD IS TO BE COMPLETED

A.P. Pettarani toll road project, which is owned by PT Margautama Nusantara (MUN), a subsidiary of PT Nusantara Infrastructure, Tbk. (META), has entered its final phase and is expected to finish this year. The contractors are PT Bosowa Marga Nusantara - a subsidiary of PT Margautama Nusantara - and PT Wijaya Karya Beton, Tbk. (WSBP). Previously, the 4.3 km of toll road was expected to commercially operate in 3Q20.

 

BAKRIE GROUP SIGNED US$2.5B METHANOL INVESTMENT PROJECT

Bakrie Group, along with Air Products - an American company - signed a US$2.5B methanol investment project in Batuta Industrial Chemical Park, Bengalon, East Kutai, East Kalimantan. The coal will be supplied by PT Bumi Resources, Tbk. (BUMI) and Ithaca Resources, then the output will be processed by Air Products’ production facility to be turned into methanol. Previously, PT Bumi Resources, Tbk. (BUMI) announced that the company will be the supplier for a coal gasification project worth US$2B in Bengalon. 

 

ADMF HAS RESTRUCTURED Rp11.1 T WORTH LEASING

In accordance with the government's guidance in order to ease the debtors affected by Covid-19 pandemic, PT Adira Dinamika Multi Finance, Tbk. (ADMF) has so far restructured the leasing of its 407 thousand customers, out of a total of 500 thousand relaxation applications, worth Rp11.1 trillion. ADMF uses postponement of installment payment scheme, from initially three months to twelve months.

 

BNLI GIVES US$70 MILLION LOAN TO TPIA

PT Bank Permata, Tbk. (BNLI) strengthens its partnership with PT Chandra Asri Petrochemical, Tbk. (TPIA) by giving the latter Term Loan Facility worth US$70 million (Rp1.04 trillion). TPIA as an integrated market leader in the petrochemical industry is expected to keep supporting the growth of Indonesia's downstream petrochemical industry, amidst the pressure caused by Covid-19 pandemic and declining trend in manufacture.

 

JSKY TO CONDUCT RIGHTS ISSUE

PT Sky Energy Indonesia, Tbk. (JSKY) plans to conduct rights issue by issuing 1,699,448,100 new shares, with a nominal value of Rp50/share. Also, JSKY will issue 711,363,700 Warrant Series I, with an exercise price of Rp90/share. The proceeds will be used for working capital, including supplier payment.

 

TECHNICAL OUTLOOK

JCI IS POSITIVE, WITH EXPECTED RANGE OF 4,450 to 4,600.

JCI closed slightly higher at 4,511. The Resistance lay still at 4,474/390 while Resistance hanging still at 4,730/975. PSAR red dot still appears, while RSI curled higher.  Stochastic still signaling negative but showing possibility to turn positive. MACD in neutral position but leaning to negative. EMA 5, & 20 confirm its death cross pattern. Hence, JCI is still showing a possibility to rebound up

 

ASII

Support            3580

Resistance        4100

Target Price     4150

 

BBNI

Support            2700

Resistance        4650

Target Price     4600

 

BBTN

Support            660

Resistance        1930

Target Price     1800

 

BMRI

Support            3780

Resistance        5400

Target Price     500

 

CPIN

Support            4100

Resistance        5900

Target Price     5700

 

DMAS

Support            102

Resistance        296

Target Price     246

 

INDF

Support            6165

Resistance        6900

Target Price     6800

 

KLBF

Support            1365

Resistance        1585

Target Price     1580

 

POWN

Support            300

Resistance        430

Target Price     430

           

WEGE

Support            107

Resistance        290

Target Price     240

 

 

DISCLAIMER

This research report is prepared by PT MINNA PADI INVESTAMA SEKURITAS Tbk. for information purposes only and is not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. The report has been prepared without regard to individual financial circumstance, need or objective of person to receive it. The securities discussed in this report may not be suitable for all investors. The appropriateness of any particular investment or strategy whether opined on or referred to in this report or otherwise will depend on an investor’s individual circumstance and objective and should be independently evaluated and confirmed by such investor, and, if appropriate, with his professional advisers independently before adoption or implementation (either as is or varied).

Tue May 19Th, 2020

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